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Impacts of coronavirus are not yet clear as county prepares fiscal year 2021 budget

True picture of revenue decline may not come until June

Hannah Grover
Farmington Daily Times
Downtown businesses shuttered as the governor enacted orders banning nonessential business operations.

AZTEC — How the COVID-19 pandemic will impact San Juan County’s budget remains unclear.

The county budget is largely dependent on gross receipts tax revenue, which relies on business activity. The county will receive the revenue from business activities that occurred in March on May 12.

The coronavirus pandemic hit New Mexico in March and led to business restrictions. However, even the gross receipts tax revenue from March may not provide an adequate picture about the impacts, as the first part of the month was not impacted by the virus.

The revenue from April business activity likely will provide a clearer picture about the impact the virus will have on the county’s budget. The county should receive that revenue on June 12.

Meanwhile, San Juan County is preparing a budget for fiscal year 2021. The preliminary budget presented to the County Commission on May 7 projects about $122.2 million in expenditures and $123 million in revenue for the fiscal year that begins July 1.

Mike Stark

County Manager Mike Stark said the county is currently 6% below its budgeted fiscal year 2020 expenditures and has used proceeds from refinanced bonds to catch up on deferred long-term maintenance.

County Finance Director Jim Cox presented five budget projections to the County Commission based on declines in gross receipts tax revenue ranging from 10% to 30%. The proposed interim budget is based on a nearly 16% reduction in gross receipts tax revenue. It also projects decreases in revenue from oil and gas production, as well as oil and gas equipment. It anticipates a potential loss of approximately $6.15 million, including an approximate $4.3 million reduction in general fund revenue.

He also presented several options for increasing revenues or decreasing expenses.

The options for increasing revenues include increasing the gross receipts tax rate or raising property taxes. Meanwhile, the options for decreasing expense include not hiring to fill vacant positions, furloughing employees, and modifying programs and services.

The preliminary fiscal year 2021 budget being discussed includes reductions in amounts spent with various nonprofits that provide social services, including libraries, youth associations and senior centers. It does not include the possibility of federal funding to assist local governments impacted by the coronavirus.

"We're not putting a budget together based on a hope and a prayer that we're going to get federal aid to rescue us," Stark said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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